patrick.net

I didn't get a piece of this pie!!

If you're not rich, you clearly did not choose your parents very well.

If you're not rich, you clearly did not choose your parents very well.

REDO!!!

So does this mean the majority of people are rich in this country? If so, then shouldn't THEY rule? What's all the boo hoo hooing about?

Yes let's devide it equally and have a pie 95% smaller.Trickle up poverty.

So, what's the problem? I don't like these kinds of comparisons.
We have 21 century and to look at people from the prism of classess is so outdated. Europe when through that already long time ago and look what is left from the former Eastern Block...

If you're not rich, you clearly did not choose your parents very well.

So Patrick, all of us that created our own slice of the pie without being born with a trust fund are freaks of nature? In case you didn't get the memo, Feudalism went out with the original Tea Party.

You might ponder this:

"A new study offers evidence that higher-educated (and therefore higher-earning) Americans do indeed spend more time working and less time on leisure than poorer income groups. In fact, while income inequality may be growing, “leisure inequality” – time spent on enjoyment – is growing as a mirror image, with the low earners gaining leisure and the high earners losing."

http://blogs.wsj.com/wealth/2012/04/27/do-the-wealthy-work-harder-than-the-rest/

I work 7 days a week for what I have and have since I was 17, working my way through college etc - if you'd prefer to be an 8:01AM to 4:59er 5 days a week and emulate the Simpsons the rest of the time that's fine for you - don't begrudge those of us that work 80+hrs a week our relative success or try and take it away to "spread around" so you get more than you work for.

Apple, Microsoft etc all started in a garage - those guys were not born into wealth - and neither was Romney if you bother to look past the lapdog press reports.

Life is really fair in Cuba, where the pie is 99.999% bottom and 0.001% top. Perhaps you'd prefer that deal?

You can do better.

nsxgood..... really? Are you serious?? wow....Name calling isn't nice so I won't call you a complete idiot in front of all the others who read this....

Also, I hope Efficient Life Church is using sarcasm...in fact I PRAY that they are...

Higher education does NOT = Higher wage earner in a direct way. The C average business majors who became hedge fund traders make FAR more than medical doctors

ph2065 says

nsxgood..... really? Are you serious?? wow....Name calling isn't nice so I won't call you a complete idiot in front of all the others who read this....

Your envy is showing.

Say whatever you want - you forget that this is the internet where ignorance = truth. Believe what you choose too - it's fashionable these days.

You'd prefer that everyone got a participation trophy?

Traders get paid for making someone else $ - or they get fired. Unless they are like Corzine of course, who has friends in high places.

This argument is as old as Karl Markx and Frederich Engels and it was defeated by Ludwig von Mises and Frederich Hayek in the early 20 Century and frankly by the reality of collapse of former Soviet Union and the whole Eastern Block.
Why people here are comming back to these same arguments?
Why these things are not tought in History classes?

nsxgod says

Microsoft etc all started in a garage - those guys were not born into wealth - and neither was Romney

Wow, those are not very good examples to support your point.

Bill Gates was indeed born into wealth and went to Harvard.

Mitt Romney's father was governor of Michigan. Mitt attended the most elite HS in Michigan, then went on to Stanford.

Zuckerberg went to Harvard. Yahoo and Google were both started by Stanford grad students. You have a better point with Apple, though those guys were born into the Silicon Valley culture so they had a bit of luck there too.

Yes, America does have elements of a meritocracy, but it's a very rigged game from birth, with the US having distinctly lower social mobility than most countries in Europe. If you're born rich in the US, you stay rich or get richer. If you're born poor, you stay poor or get poorer. This is the norm -- on average and as a rule -- not always. The exceptions are what keep people putting up with the grossly unfair norm. America has a lottery mentality which is just not rational or looking at the facts.

Most wealth is inherited in the US, not earned.

By far the most important thing you can do to improve your chances of success is indeed to choose your parents wisely.

The fix for that is simple: LOWER income taxes for actual work and HIGHER income taxes for unearned income (dividends, capital gains, land rents, inheritance).

Then we would really be encouraging self-made men. Right now, if you work harder and make more, you get punished with higher taxes while the slacker trust-fundies laugh at you and pay 15% at most.

Most wealth is inherited in the US, not earned.

Really?
Recently, PNC Wealth Management conducted a survey of people with more than $500,000 free to invest as they like, a fair definition of “wealthy,” and possibly “millionaire” once you begin including home equity and other assets. Only 6% of those surveyed earned their money from inheritance alone. 69% earned their wealth mostly by trading time and effort for money, or by “working.”

Here are some interesting statistics I pulled from an article discussing the survey results.

36% of earners and 27% of heirs are concerned about an economic recession.
77% of earners and 67% of heirs believe they have a lot of control of their financial future.
39% of earners and 21% of heirs are moderate or risky investors.
75% of earners and 50% of heirs have less stress thanks to their wealth.
51% of earners and 33% of heirs believe their wealth has led to increases of happiness.
Heirs are twice as likely to believe that their wealth causes more problems that it solves.
37% of earners and 25% of heirs believe that luck played a major role in their financial success.
For me, the choice is clear. There is only one option if I want to find myself with $500,000 of investible assets: earn rather than inherit.

Didn't know there was a Class War? Neither did the others in the 80%.....

we lost.

More to the point would be wealth rather than income. That works out to the top 20 having 93%.
This means that 80% have been getting along with only 7% of the resources.
If the proles ever figure it out, the guillotines come out and we gain a future with 13 times what they already have or (if we were actually an intelligent, intentional species) a future with most of the resources left in the ground for emergencies.
Too bad we're locked into the sleep-work-spend cycle and the timer never seems to ring the bell for "done".
http://joebageant.com/joe/2010/12/america-y-ur-peeps-b-so-dum.html

Jeez, we've been over this so many times.

Yes, the majority of rich or somewhat rich people earned their money.

But most wealth by total dollars is nonetheless inherited wealth by a smaller number of vastly richer people. Kotlikoff and Summers (yes that Summers, the Sec of Treasury) found an inheritance share of 80% for total wealth in the US.

So we're comparing faily well-off doctors and lawyers to stinking rich heirs to large fortunes here. See the difference?

Now why should the doctor or lawyer be paying 35% in income taxes while the billionaire heir pays 15% or less?

Then maybe the title of your post and the graph used ought to be changed to reflect your actual point?

Now why should the doctor or lawyer be paying 35% in income taxes while the billionare heir pays 15% or less?

My personal feeling is the we ought to adopt Mike Lees budget reform plan and have a flat tax, where everyone pays the same amount on all income on a 1 page tax form, but that's just me.

I'll go one better: we should not have an income tax at all, but only a flat 2% annual tax on assets.

That 2% tax on assets would provide as much revenue as all our income taxes, sales taxes, inheritance taxes, etc put together.

That 2% tax on assets would provide as much revenue as all our income taxes, sales taxes, inheritance taxes, etc put together.

mind sharing that link?

Patrick, I'm new here but it appears that you are a host of that web site. Could you do us a favor and state your original thesis right beneth the graph or above it?

What is your main poin in here?

GraooGra says

What is your main point in here?

That ought to be obvious by the "flavor" of the conversations.

Patrick - you might want to check this out:

http://www.forbes.com/sites/erincarlyle/2012/03/13/how-americas-wealthiest-get-rich/

and give us a list of how many of them inherited all their wealth without lifting a finger or firing off a neuron.

I'd bet the workers outnumber the slackers.

Just a thought.

Not expresing the point is a typical logical fallacy. It allows to move the argument into different subjects and directions.

Let's think about 2% tax on assets for a while.
Would you tax corporations for purchasing Furniture Fixtures and Machines or Plant and Property? Whould you tax everybody on their Savings Accounts and other liquid assets? What about sales tax, isn't it a tax on assets already?

Yes I was being sarcastic, but I do know some wealthy people who help support a whole hoard of slacker family members, x wives, children etc.

nosimpsonsneedapply says

That 2% tax on assets would provide as much revenue as all our income taxes, sales taxes, inheritance taxes, etc put together.

mind sharing that link?

http://patrick.net/?p=1133205

GraooGra says

What is your main poin in here?

It must be that I hate America and am a commie libtard, right?

No, just the opposite. We have a tax system right now that punishes work and rewards being a slacker owner of all the assets.

This started just because I happened to see that pie graph and submitted it as a link to the forum.

GraooGra says

Let's think about 2% tax on assets for a while.
Would you tax corporations for purchasing Furniture Fixtures and Machines or Plant and Property? Whould you tax everybody on their Savings Accounts and other liquid assets? What about sales tax, isn't it a tax on assets already?

Good question. Henry George would say you should not tax any capital (things created by people) but instead tax only land, which no one created.

But maybe a small tax on certain kinds of capital is also good, perhaps with an exemption up to the median amount of capital owned. So you'd pay no tax on the first $100K of asset or something like that.

Sales tax is a tax on transactions, not assets. Sales tax discourages commerce in the same way that income tax discourages work.

What you really want to discourage is non-productive rent-seeking.

Sales tax is a tax on transactions, not assets. Sales tax discourages commerce in the same way that income tax discourages work.

But if you don't have an income tax, then the sales tax encourages work and hiring (eliminating the overhead of income tax laws) while discouraging spending and encouraging savings.
Commerce itself is just the speed of money. A sales tax discourages the purchase of useless things that don't add to the future, while making government revenue tied to an appropriate rate of trade (the reason we have a Navy is to protect the shipping lanes, so a tax on commerce should pay for the Navy).
Adding a prebate feature (see fairtax.org) makes it progressive for those who give a damn about what it costs to live in poverty or on a fixed income.
It doesn't cost the government anything for me to own property. It costs when I demand them to make resources available through patent systems, oil wars, and protection services because I bought stuff to put ON the property.

Oh, and I forgot to add that commerce (a.k.a. "The Economy") is not something we should be making decisions on. It is a SIDE EFFECT of people living, working, and acting usefully. If they start living and working and acting based on the flow of cash, then the logic turns into circular reasoning influenced by crooked realtors and other marketing agents who play with our lizard brains.
People make decisions in one place: the checkout line. The cost of consumption/government/pollution cleanup should be immediately visible at that decision point, not buried behind a wall of Human Resources administration and income tax preparers and lobbyists.
Our votes are counted by the dollars we spend. Those votes should be informed choices, not impulse buys at 80% off the real costs.

First of all I went to the link which explain how this 2% tax on asset was created. I looked at the figure of 187 billion and I'm telling you the guy extracted that number from both houshold assets, government assets and all kinds of assets, not only stocks and bonds. It means you would tax gov assets with a tax and then they would also be consumers of their own tax. It doesn't make sense to me.

I think that by taxing assets you mean taxing investment income, stocks, bonds, all kinds of investments. People who invest they create capital which creates growth and ultimately jobs. Investors are risk takers and they should be also rewarded for it, not only punished. Also if you want to level out taxes for certain categories and according to you these categories which should pay more are not income producers then maybe there is the other method.... The biggest NON income producer but consumer and spender true taxation is government. Maybe we should limit that entity and we resolve problem with taxes.

Yes, the majority of rich or somewhat rich people earned their money.

It will be interesting to see the statistics in another 15 years or so, after the Rachel's Challenge (an anti-bullying effort in schools) settles into the next couple of crops of graduates.
"Earning" and "Coercing" wealth from an ignorant populace are two different things. On a field where bullying is rewarded and jack-assery pays top dollar, then the future looks quite different from one where people are aware of what's actually happening to their resources and time, and where cooperation has some merit over cutthroat isolation.
The Wealth Redistribution folks don't like to admit that their process is just as dependent on bullying as the "I've Got Mine" crowd's is.
Commerce is a luxury that doesn't have to be forced upon us through bailouts, tax loopholes and corporate welfare (the worst being sports arenas supported with local taxes on the premise of "job creation", I think).

Maybe this will help give some perspective:

http://latimesblogs.latimes.com/money_co/2011/12/six-walmart-heirs-wealthier-than-bottom-30-percent.html

Six Wal-Mart heirs are wealthier than the entire bottom 30% in the US.

Six people, alone.

Good for them! Why we even talk about that? Are you directly affected that some heirs are wealthier than the rest of us? I don't envy them. Let them be.

GraooGra says

Good for them! Why we even talk about that? Are you directly affected that some heirs are wealthier than the rest of us? I don't envy them. Let them be.

We talk about it because one aspect of accumulating wealth (resources) is to KEEP THEM AWAY from everyone else. This is what makes the price go up when people need resources to live or work.
It isn't that people have so much more than everyone else, but that they have so much more than they need and they are keeping it away from those who could put the resources to good use.
This used to be a fundamental obligation of those who accumulated wealth through the work of communities and the resources of the commons: to give back more than they take so that there will be a future. When natural resources and human resources were relatively scarce, a lot could be said for the value of the entrepreneur who built a city around his factories. Now, however, most of those who are accumulating wealth are not doing so by putting humans to work with natural resources (making stuff that fills a real need): they are simply harvesting the flow of capital among the coerced consumers (see "Coercion" by Douglas Rushkoff). Those consumers are addicted to a sleep-work-spend treadmill that they have little chance of exiting and no leadership to teach them how or to question the status quo. The government and corporations (mostly the Bilderbergers) are now working late in dark smoky rooms trying to suck up the inertia of the post-Peak Oil activities, almost all of which are winding down. Whether consciously or subconsciously, people are starting to realize that the 1950's Consumer Economics Party is ending, and if the cops haven't shown up by now, those still alive will be cleaning up the house for a long, long time. The super-rich just move to a different island or give up their citizenship to avoid their obligation to the communities they harvested (see "extraction economics").

nosimpsonsneedapply says

Recently, PNC Wealth Management conducted a survey of people with more than $500,000 free to invest as they like, a fair definition of “wealthy,”

Hahahaha. $500k wealthy? Good one. Here is some perspective. Warren Buffett is wealthy. His wealth is equal to 100,000 $500k "weathly" folks added together.

If you have $500k you are as close to Warren Buffett as the guy who has a net worth of $5 is to you.

A guy with a net worth of ten bucks is twice as close to you economically as you are to Warren Buffett.

Do you actually think this economy will ever truly recover when the 20 wealthiest americans collectively have equal wealth with the bottom 150 million?

Think about it. How much better would the economy perform if half of the wealth of the top 20 went to the bottom 150 million? The top 20 would still be rich as hell. Their spending is most probably unaffected. If the bottom 150 million was suddenly 50% wealthier, what would they do with it? Who is going to spend more, the top 20 or the bottom 150 million?

GraooGra says

Good for them! Why we even talk about that? Are you directly affected that some heirs are wealthier than the rest of us? I don't envy them. Let them be.

I like your question because it brings up important issues that need to be evaluated honestly, not just emotionally.
What Net Future Usefulness is created by those heirs as they accumulate so much wealth? Or, as in most cases, are they just increasing the rate at which humans consume things, and then skimming money off the stream as it is created from natural resources and discarded in landfills?
What harm have we been done by such disproportionate ownership?
Two words:
Hillary Clinton

We talk about it because one aspect of accumulating wealth (resources) is to KEEP THEM AWAY from everyone else. This is what makes the price go up when people need resources to live or work.
It isn't that people have so much more than everyone else, but that they have so much more than they need and they are keeping it away from those who could put the resources to good use.
_____
What do you suggest then, they are 'filthy rich' lets take their "resources" and divide them equally? Who should decide what to divide? At what amount of their wealth you let them stay and at what you want them to share with the rest of us? Aren't Waltons entitled to passing on to their heirs the fruits of their labor they created? Who goes and who stays? What criteria would you use to decide?
Life is not fair and it is not equal and it never is going to be. You might be healthy and you take resources from a sick person. It is not just to that poor sick person, so let's take your kidney and give it to the sick... Do you see the slippery slope that kind of thinking leads us to?

they are simply harvesting the flow of capital among the coerced consumers (see "Coercion" by Douglas Rushkoff).

It sounds like Douglas Rushkoff thinks that regular people are stupid and they allow the other ones to coerce them.
Some maybe stupid and some are not. People overall have brains and make their own choices. Give them freedom to choose what they want. They would finally figure it out what is good for them and what is bad.

"What Net Future Usefulness is created by those heirs as they accumulate so much wealth?"

Again I give my kidney example. You need to define what is exactly "Net Future Usefulness" and who should check it and decide how to divide.

GraooGra - this is like talking to a wall. It's obvious that basic math is missing from this thread.

Auntiegrav - You could confiscate 100% of all the net worth of the entire country and not pay off the deficit, (there would be a Trillion of debt left over)and then what would you do the next year? Here's some math for you:

A dominant theme of President Obama's budget speech last Wednesday was that our fiscal problems would vanish if only the wealthiest Americans were asked "to pay a little more." Since he's asking, imagine that instead of proposing to raise the top income tax rate well north of 40%, the President decided to go all the way to 100%.

Let's stipulate that this is a thought experiment, because Democrats don't need any more ideas. But it's still a useful experiment because it exposes the fiscal futility of raising rates on the top 2%, or even the top 5% or 10%, of taxpayers to close the deficit. The mathematical reality is that in the absence of entitlement reform on the Paul Ryan model, Washington will need to soak the middle class—because that's where the big money is.

***
Consider the Internal Revenue Service's income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers—those with salaries, dividends and capital gains roughly above about $380,000—paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the "millionaires and billionaires" Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.

Say we take it up to the top 10%, or everyone with income over $114,000, including joint filers. That's five times Mr. Obama's 2% promise. The IRS data are broken down at $100,000, yet taxing all income above that level throws up only $3.4 trillion. And remember, the top 10% already pay 69% of all total income taxes, while the top 5% pay more than all of the other 95%.

We recognize that 2008 was a bad year for the economy and thus for tax receipts, as payments by the rich fell along with their income. So let's perform the same exercise in 2005, a boom year and among the best ever for federal revenue. (Ahem, 2005 comes after the Bush tax cuts that Mr. Obama holds responsible for all the world's problems.)

In 2005 the top 5% earned over $145,000. If you took all the income of people over $200,000, it would yield about $1.89 trillion, enough revenue to cover the 2012 bill for Medicare, Medicaid and Social Security—but not the same bill in 2016, as the costs of those entitlements are expected to grow rapidly. The rich, in short, aren't nearly rich enough to finance Mr. Obama's entitlement state ambitions—even before his health-care plan kicks in.

So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. The nearby chart shows the distribution, and the big hump in the center is where Democrats are inevitably headed for the same reason that Willie Sutton robbed banks.

This is politically risky, however, so Mr. Obama's game has always been to pretend not to increase taxes for middle class voters while looking for sneaky ways to do it. His first budget in 2009 included a "climate revenues" section from the indirect carbon tax of cap and trade, which of course would be passed down to all consumers. Such Democratic luminaries as Nancy Pelosi have often chattered about a European-style value-added tax, or VAT, which from a liberal perspective has the virtue of applying to every level of production or service and therefore is largely hidden from the people who pay it.

Now that those two ideas have failed politically, Mr. Obama is turning as he did last week to limiting tax deductions and other "loopholes," such as for mortgage interest payments. We support doing away with these distortions too, and so does Mr. Ryan, but in return for lower tax rates. Mr. Obama just wants the extra money, which he says will reduce the deficit but in practice will merely enable more spending.

Keep in mind that the most expensive tax deductions, in terms of lost tax revenue, go mainly to the middle class. These include the deductions for state and local tax payments (especially property taxes), mortgage interest, employer-sponsored health insurance, 401(k) contributions and charitable donations. The irony is that even as Mr. Obama says he merely wants the rich to pay a little bit more, his proposals would make the tax code less progressive than it is today.

Mr. Ryan isn't proposing controversial entitlement reforms because he likes pointless political risk, or because he likes being berated to his face from a front row seat, as he was on Wednesday. Medicare and Medicaid spending are consistently growing two to three times faster than the rest of the economy, while Medicare's cash-in-cash-out financing model means that seniors collect far more in benefits than they paid in taxes over their working lifetime. The entitlement state was designed for another era.

***
Mr. Obama's speech was disgraceful for its demagoguery but also because it contained nothing remotely commensurate to the scale of the problem. If the President had come out for a large tax on the middle class, like a VAT, then at least the country could have debated the choice of paying for the government we have or modernizing it a la Mr. Ryan so it is affordable.

Instead the President will continue targeting the middle class for tax increases to pay for an entitlement state on autopilot, while claiming he only wants to tax the rich. Oh, and we almost forgot: Happy Tax Day.

Pop some popcorn:

http://youtu.be/3h8O7V-WxWQ

Here's the one I was actually looking for:

http://youtu.be/Z1j-cCaKvdo

GraooGra says

Are you directly affected that some heirs are wealthier than the rest of us?

Why yes, I am affected, and so are you.

Did you forget that every price you pay for everything you buy is directly determined by how much other people can pay?

That's fine, except when other people can pay a lot more than you without ever doing anything useful, perhaps by merely owning the very ground you live on.

Then you lose twice:

1. You pay them rent for land that they did not create.
2. They use that rent to drive up the cost of living for you.